Companies Raising Prices Due to Tariff increase, Walmart Threatens to Follow Suit
The back and forth between China and the United States in the ongoing trade war is starting to sting the US-based companies, who are struggling to maintain profitability against the backdrop of increasing import tariffs.
Donald Trump kicked off the week by imposing an additional 10 per cent import tariffs on over $200 billion worth of Chinese goods. This time, U.S. president targeted a wide range of consumer goods that stirred an outcry from American companies. The White House justified the tariffs as critical for national security issues but the move was largely motivated for economic reasons. The new levies will make imported goods more expensive therefore the locally manufactured substitutes more appealing.
The new duties along with the previous ones will subject more than half of the imported Chinese goods to increase taxes. GlobalData Retail’s managing director, Neil Saunders says that the ongoing trade war is bad news for retailers, especially the latest round of tariffs that directly affects the prices of a variety of consumer goods. Companies will now have to decide whether they want to pass the tax burden onto the consumers or let their own profit margins take a hit.
Luckily, increase in average household income in the U.S. means that consumers can afford to spend a little more on goods, but if the prices rise across the board, the retail sector will likely see a decline in sales volume which will affect their profits in the long term.
Ever since the trade war began, companies like Coca-Cola and Winnebago have raised their prices while others are planning to follow suit. Here are some of the most popular American brands that have fought back against the tariffs by raise prices.
Walmart recently sent a warning letter to the U.S. government that if the most recent tariffs on Chinese goods aren’t reversed, it will have no choice but to increase prices for the consumers. Walmart wrote that it was very concerned about the effect of these tariffs on its business, consumers, suppliers and the country’s economy as a whole.
Gap is another retail giant that has been affected by the recent tariff increase. The company’s CEO, Art Peck, recently told Bloomberg in an interview that it is frantically trying to move its manufacturing away from China. Peck said that 22 per cent of the company’s apparel is still manufactured in China, in which case, it will have no choice but to pass the tax burden to its consumers.
On July 27, Coca-Cola announced that it was planning to raise prices on all its sodas due to the tariff increase. CEO James Quincey said in an interview with the Wall Street Journal that the steel and aluminum tariffs imposed by President Donald Trump were one of the biggest causes behind the price push.
Michael Happe, the CEO of Winnebago Industries, said that the company has been making some aggressive price increases lately because, like many others, it too has been affected by the steel and aluminum tariffs. The company has also been forced to change its RV’s design to cut down on costs.
Polaris is an American company that makes motorcycles and snowmobiles. Its CEO, Scott Wine, said in a press conference recently that the company had to increase prices on its products after the steel and aluminum tariffs were announced. Wine warned that a collective price increase on consumer goods could have an impact on the economy and trigger inflation.
Whirlpool washing machines
During a conference call with shareholders in July, Marc Bitzer, the CEO of Whirlpool, revealed that the steel and aluminum tariffs have increased raw material costs for the company, which has affected its profit outlook. The company is now increasing prices to cover the costs.
GM wrote a letter to the US Commerce department in June, calling the government to abandon the tariffs on the auto industry which could increase prices by thousands of dollars on individual consumers. The letter said that even if the company passes down the tax burden to the consumers, it would impact the demand for new cars and lower profits indirectly.
More in Global Markets
Find Out How Your Dream Car Can Ruin Your Retirement Plans
People usually work really hard on their chosen careers, so they could live a comfortable life as well as provide for...May 17, 2019
These Billionaires Are Not Leaving Their Kids With Money
Today, we are going to have a continuation of yesterday’s article where we already discussed when parents should take a step...May 17, 2019
Want a Better Return on Your Investment? Follow These 5 Strategies
All business owners who invest money into their company wish to have a healthy return on investment. However, since every business...May 17, 2019
L’Oreal Capitalizes on China’s Growing luxury Market Amid Economic Slowdown
The trade war between the U.S. and China has taken a toll on businesses in both countries, but there is one...May 17, 2019
You Won’t Believe How Much Mark Wahlberg Earned Compared to His Female Co-Star
Gender inequality is a thing of the past, right? Wrong. It raises its ugly head even more than you would imagine,...May 17, 2019
Financial Advisors Say These Are the Things You Should NOT Buy Using Credit Card
As we enter the year 2018, may we develop financial maturity as handling and budgeting money is becoming increasingly hard. That...May 17, 2019
When One Life Insurance Policy is not Enough
Yes, it’s true that you can get as many life insurance policies as you want. However, there is a certain limit...May 17, 2019
What to Know About Deposit Saving Duration for First Home Buyers in Australian Capital Cities
First Home Buyers Report Data recently released by Domain indicated that couples who were buying homes for the first time in...May 17, 2019
Top 10 Creative Means to Get Your Baby Startup Funded
Gone are the days when applying to banks was the only way to get a loan for your business. A lot...May 17, 2019